As much as the economic numbers have been sobering, investors appear to believe China has a second wind in it.

With all the nervousness and angst that’s been going on about the impending collapse of China like a house of cards along with the bullying of foreign companies doing business in the Middle Kingdom, you would think investors would be looking for other opportunities to park cash. Well think again.

“Investors are returning to the largest Chinese exchange-traded fund in the U.S. at the fastest pace in almost two years on signs a government stimulus program will support growth in the world’s second-largest economy. The iShares China Large-Cap ETF has attracted a net $518 million in August, putting it on track for the biggest monthly inflow since $1.34 billion was added in December 2012. The ETF, which has Tencent Holdings Ltd. and China Mobile Ltd. among its 25 stocks, reached an 18-month high on Aug. 13 after rallying 26% from a March low. “

“People are getting more constructive on China, on the Chinese government’s smooth recovery plan,” Walter Price, a senior portfolio manager at Allianz Global Investors, which manages $493 billion in assets, said in a phone interview from San Francisco. “The U.S. and European markets are making their new highs, and the China market is very far from its high, so the feeling is that these stocks are going to catch up.”

Empty cities? Who Cares

The nation’s new-home prices fell last month in almost all cities that the government tracks amid a housing market slump that has become a drag on its economy, prompting the municipalities to start easing local curbs from June. Thirty-six had loosened measures through mid August, according to the Centaline Property Agency.

What’s Driving The surge

Chinese Premier Li unveiled in April a plan to link stock exchanges in Shanghai and Hong Kong, which will allow a net 23.5 billion yuan ($3.8 billion) of daily cross-border purchases. When the link starts in October, it’ll give international investors a new route to buy Chinese stocks while helping Hong Kong bolster its status as a gateway to mainland markets.

Low Hanging Fruit

Low interest rates and a perceived bubble formation of developing country stock markets aside, it seems that investors are throwing money back in China, looking for revitalization in the industries that fostered its initial growth such as infrastructure, and real estate. The reality is these are low-hanging fruit that has been picked. China’s next wave of meaningful growth will come from environmental technologies such as wind and solar as well as medical technologies to advance their health care system. Finally China is looking to move up the manufacturing chain and engage in more value added manufacturing and production. As the country rebalances its economy from an export and manufacturing driven society to a more consumption based society, consumer oriented businesses will gain more prominence.